Caution Ahead for Emerging Markets

Emerging-markets stocks have handily outperformed the S&P 500 this year. But headwinds are building.

While a number of factors support positive emerging-market performance, a few key risks could cause significant headwinds. The U.S. dollar could remain strong and U.S. interest rates are likely to rise. Global trade could decline amid increased protectionist measures. And, Chinese foreign exchange, debt overhang, and overcapacity risks will eventually need to be addressed.